US House rejects $700 billion financial rescue package

Intense negotiations this weekend produced a compromise $700 billion plan to shore up the nation’s finances, but didn’t produce a package the United States House could accept. Despite pleas from both Democratic and Republicans leaders, members defeated the measure 205-to-228. The fate of the package first proposed by the Bush Administration remains uncertain.

House Speaker Nancy Pelosi (D-San Francisco) declared the bill frozen, allowing no changes during House floor debate. Both Democrats and Republicans spoke on the measure. Leadership on both sides urged passage, but couldn’t get the numbers needed for passage. In the end, 65 Republicans joined 140 Democrats to vote in favor of the measure, while 95 Democrats joined 133 Republicans to defeat it.

Sentiment was split among members of the Missouri delegation. Two Democrats and two Republicans voted for the bill; Democrats Russ Carnahan of St. Louis and Ike Skelton of Lexington as well as Republicans Roy Blunt of Springfield and Jo Ann Emerson of Cape Girardeau. Two Democrats in the Missouri delegation, Lacy Clay of St. Louis and Emanuel Cleaver II of Kansas City, and three Republicans, Todd Akin of St. Louis, Sam Graves of Tarkio and Kenny Hulshof of Columbia, voted against the measure.

House Republicans raised objections to the initial plan submitted by the Bush Administration by Treasury Secretary Henry Paulson sent Blunt into the negotiations Friday. An earlier meeting at the White House reportedly devolved into a shouting match with Democrats accusing Republicans of upsetting the delicate balance of negotiations. Republicans criticized Democrats for keeping them out of negotiations.

The plan was intended to shore up the nation’s financial sector, rocked by bank failures that have nearly frozen the credit markets. Normal lending transactions have been held up. Even strong financial institutions have become skittish.

The bill sought to inject $250 billion into the financial sector immediately. Congress would be consulted before the remainder would be released. The money would have been used to remove troubled assets from the books of financial institutions, mostly mortgage-back securities that have lost considerable value with the collapse of the housing market.

Democrats won concessions on executive pay, eliminating the possibility of executives leaving companies that participate with so-called golden parachutes. Republicans won concessions that they claim will lessen the burden on taxpayers and force Wall Street to share in the cost of recovery, such as issuing warrants that would allow any windfall coming to companies to be shared with the government. A parallel insurance program would also be created.

The compromise had the backing of President Bush, who acknowledged it presents lawmakers with "a difficult vote" just a month outside the November elections. Congressional leaders are meeting to decide their next step.